Albemarle (NYSE:ALB) versus Ecolab (NYSE:ECL) Critical Survey

Albemarle (NYSE:ALB) and Ecolab (NYSE:ECL) are both large-cap materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Albemarle and Ecolab, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Albemarle	1	9	15	0	2.56
Ecolab	0	3	18	1	2.91

Albemarle presently has a consensus price target of $174.05, indicating a potential upside of 83.25%. Ecolab has a consensus price target of $328.58, indicating a potential upside of 7.26%. Given Albemarle’s higher probable upside, analysts clearly believe Albemarle is more favorable than Ecolab.

Insider & Institutional Ownership

92.9% of Albemarle shares are held by institutional investors. Comparatively, 74.9% of Ecolab shares are held by institutional investors. 0.4% of Albemarle shares are held by insiders. Comparatively, 0.5% of Ecolab shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Albemarle has a beta of 1.34, suggesting that its stock price is 34% more volatile than the S&P 500. Comparatively, Ecolab has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500.

Dividends

Albemarle pays an annual dividend of $1.64 per share and has a dividend yield of 1.7%. Ecolab pays an annual dividend of $2.92 per share and has a dividend yield of 1.0%. Albemarle pays out 39.6% of its earnings in the form of a dividend. Ecolab pays out 39.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Albemarle has raised its dividend for 30 consecutive years and Ecolab has raised its dividend for 33 consecutive years. Albemarle is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Albemarle and Ecolab’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Albemarle	10.40%	14.91%	7.58%
Ecolab	11.99%	22.57%	8.23%

Valuation and Earnings

This table compares Albemarle and Ecolab”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Albemarle	$5.14 billion	2.18	-$510.63 million	$4.14	22.94
Ecolab	$16.08 billion	5.34	$2.08 billion	$7.35	41.68

Ecolab has higher revenue and earnings than Albemarle. Albemarle is trading at a lower price-to-earnings ratio than Ecolab, indicating that it is currently the more affordable of the two stocks.

Summary

Ecolab beats Albemarle on 13 of the 18 factors compared between the two stocks.

About Albemarle

Albemarle Corporation is a specialty chemicals company that produces lithium, bromine and refining catalysts. Its products serve industries including energy storage, transportation, electronics, petroleum refining and pharmaceuticals. The company supplies lithium compounds used in rechargeable batteries and other applications. It also makes bromine-based products for uses such as flame retardants and water treatment, along with catalysts used in refining petroleum. Albemarle traces its history to 1887 and is headquartered in Charlotte, North Carolina.

About Ecolab

Ecolab Inc. provides water, hygiene, cleaning and infection-prevention products and services to businesses and institutions. Its solutions help customers manage water use, maintain sanitary environments and support operational efficiency. The company serves a range of industries, including food and beverage, foodservice, hospitality, healthcare, life sciences and manufacturing. Its offerings include cleaning and sanitizing products, water-treatment programs, pest-elimination services, and related monitoring and consulting support.